ROME, Dec. 6 (UPI) -- The counterfeit food business is doing well in Italy, with peddlers selling items from watered-down olive oil to imitation cheese, a report indicated.

The annual report, issued Thursday by the Citizen's Defense Movement and environment non-profit Legambiente, documented 500,000 government inspections that led to the seizure of 28,000 tons of counterfeit or adulterated products worth more than a half-billion dollars in 2012, the ANSA news agency reported.

The highest rate of seizures, about 47 percent, occurred within Italy's wine sector.

Authorities also seized 4.6 tons of tomatoes -- another mainstay of Italian cuisine -- that were fraudulently sold as organic or falsely labeled as a "Protected Designation of Origin" product, an EU designation for products whose claim to quality depends on the territory in which they were produced.

ANSA reported that Chinese tomato sauce was repackaged with a "Made in Italy" label.

"Consumers are still the unwitting victims of food fraud," Citizens' Defense Movement President Antonio Longo said. "We need severe penalties to be a real deterrent."

"Guaranteeing food safety is not just healthy, but also crucial to safeguarding our gastronomic heritage," Legambiente President Vittorio Cogliati Dezza said.

The agriculture association Coldiretti said unfair competition from foreign produce branded to look as if it were from Italy contributed to the failure of 136,351 farms and agricultural companies since the global economic crisis began in 2007.